Born in Spalding, Idaho, she graduated from Lapwai High School and attended a year of business college before moving to southern California in 1923 to live with her sister, Hazel. In 1924, Lillian became Walt first official secretary before marrying him one year later. On her early years at Disney Lillian recounted the following;
"I was not very artistic at all and I was never very good at inking and painting. Later, Walt made me his secretary, but I made too many mistakes when he was dictating. He always said I was so bad he had to marry me. They tried to use me as a secretary, but I wasn't very good at it. So I went back to painting".
Her filmography includes working as an ink artist for the short film Plane Crazy. Lillian is credited with having named her husband's famous character, Mickey Mouse, during a train trip from New York to California in 1928. Walt showed a drawing of the cartoon mouse to his wife and told her that he was going to name it "Mortimer Mouse." Lillian replied that the name sounded "too pompous" and she was very proud to have suggested the name "Mickey Mouse" instead of Mortimer.
Walt named one of the Disneyland Railroad cars the "Lilly Belle" in her honor, and the Walt Disney World Railroad in Magic Kingdom has the locomotive named "Lilly Belle", where each locomotive is named for someone who greatly contributed to Walt Disney Productions or The Walt Disney Company. Walt Disney Imagineering created "The Empress Lilly", a paddle steamer replica, at Downtown Disney at the Walt Disney World in Florida which was christened by Lillian herself on May 1, 1997. Lillian was inducted to the Disney Legends in 2003.
Lillian Disney suffered a stroke on December 15, 1997, which was exactly 31 years after the death of her first husband, Walt. She died the following morning on December 16, 1997, at her home in Los Angeles, California. She was 98 years old.